It’s too soon to stop rate hikes in the euro area — idealista/news

2023-08-25 10:59:47

The president of the Bundesbank, the central bank of Germany, Joachim Nagelmember of the Governing Council of the European Central Bank (ECB), considers that it is still too early to think of a pause in the cycle of interest rate rises, while he has been confident that the largest economy in the euro zone will manage to avoid the recession.

“I think it’s too early to think about a pause”, Nagel pointed out in an interview with Bloomberg TV, collected by the Europa Press agency, in which he defended the need to wait for the next figures to assess the situation when the ECB Governing Council meets again in September.

In Nagel’s opinion, During the next year, most of the effects related to the measures adopted by the ECB during the last 12 months will be visible, although he recalled that the inflation rate is still around 5%, “so it is too high”, since the target is 2%.

“There is a way to go, but we have to wait for the September data,” he said, adding that while the headline rate may be easing, it may take more time for the core rate to decline as well.

He European Central Bank (ECB) announced in July a new rise in the price of money, until placing them at 4.25%, barely 50 basis points from all-time highs. And the market does not rule out a new increase at the September meeting

On the other hand, the president of the Bundesbank has assured that does not see a “hard landing” scenario for Germany and has been “quite optimistic” about the possibility of a soft landing.

In this sense, Nagel has assured that, despite the fact that one hears a lot about Germany as “the sick person of Europe. This is not the case”, adding that the adaptability of the German economy should not be underestimated, even if it is Going through a difficult few months.

“The third quarter looks pretty weak, but for next year I am more optimistic (…) I don’t see that there is going to be a recession and, as I said, the adaptability of the German economy is good and we will do our job,” he defended.